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Exosome Dx, Aiming to Commercialize “Liquid Biopsies,” Seeks $25M

It’s the moment of truth for any emerging diagnostics firm: the transition from startup to commercial-stage company. Time to convince insurers that you have something worth paying for, and doctors in major hospitals and community practices to change how they practice and incorporate your test.

That critical point is where Cambridge, MA-based Exosome Diagnostics finds itself today. According to Exosome CEO Thomas McLain, the company aims to raise $25 million, on top of the $27 million in Series B funding it raised last March. Exosome would use the cash to launch its first two products: a blood-based test for lung cancer, and a urine test for prostate cancer. At that point, the long commercial slog would begin, with Exosome leaning on the results of a battery of clinical tests it’s been running to try to make its technology a factor in cancer care.

“We’re at an inflection point,” McLain says. This year, “we’re going to become for the first time, a commercial-stage company.”

That’s by no means a guarantee of success. As McLain acknowledges, several companies with great tests have perished trying to bring them to market.

Why does Exosome think its fate will be different? For one, it’s starting out with tests that identify genetic mutations that are well-known and accepted by physicians as tumor drivers—like the ALK and T790M mutations in lung cancer.

It’s also trying to make an economic case. In prostate cancer, for instance, Exosome is trying to obviate the need for unnecessary biopsies, which could ultimately save the healthcare system money (not to mention sparing patients a painful procedure). These lung and prostate cancer tests are case studies the company is using to prove that its approach—identifying mutations in genetic material carried by exosomes, little vesicles released by cells—can be used more broadly.

It’s easy to see the potential promise of these so-called liquid biopsies. Cancer care is increasingly becoming more and more about the genetic signatures on tumor samples, and finding treatments specifically tailored to address those mutations. Those samples are typically taken with a scalpel or a needle, but surgical methods only give clinicians a snapshot of a tumor at that point in time. What alterations will crop up a month or a year later? What happens if a treatment chosen based on that first biopsy stops working?

“It’s not something where a patient is going to be jumping up and down saying I want to have another operation or another biopsy,” McLain says.

Indeed, tissue biopsies are expensive, and often risky in patients with advanced disease. Liquid biopsies, on the other hand, are less invasive, and could be administered more frequently. A lung cancer patient, for instance, could get a monthly blood test to get a more real-time look at disease progression, and how his or her cancer’s DNA is mutating. A clinician could adjust a patient’s treatment regimen to match up with the results of those tests.

Several companies have been developing liquid biopsies to capitalize on the opportunity. Most are using variations of two methods: cell-free DNA, or cfDNA (examining DNA from dying cancer cells that spills into the bloodstream), and circulating tumor cells, or CTCs (intact tumor cells that break off from a tumor into the bloodstream). San Jose, CA-based Chronix Biomedical, for instance, has a cfDNA diagnostic for breast cancer. A Redwood City, CA-based startup, Guardant Health, markets a … Next Page »